The U.S. economy weakened for the second consecutive month in November, the National Association of Purchasing Management said.
The Purchasing Managers' Index, which covers the manufacturing economy, fell to 41.3 percent from 43.4 percent in October, its lowest point since the trough of the previous recession in Nov. 1982.The New Orders Index posted its fifth consecutive monthly decline, falling sharply to 39.4 percent from 43.8 percent in October and the lowest level since May 1982.
A PMI level of below 50 indicates the manufacturing economy is in decline, while a reading below 44 indicates the entire economy is in decline. November was the second consecutive month in which the PMI was below 44.
"The negative growth in the U.S., economy, registered in October for the first time in 10 years, has deepened in November," said Robert Bretz, chairman of the Association's Business Survey Committee.
"Almost all indicators confirmed the decline in growth with the exception of Export Orders which continues to support the economy from even greater decline.
"Nevertheless, with the engine of the economy, New Orders, at its lowest point in over eight years, it appears likely the negative trend will continue for some time."
Bretz, also the director of corporate purchasing at Stamford, Conn.-based Pitney Bowes Inc., added, "If the PMI remains unchanged at the November level for December, then past experience indicates this would be consistent with real GNP growth of approximately 0.9 percent for all of 1990 and a decline in fourth-quarter real GNP of approximately 0.6 percent."
The report said the economic decline will not bottom until the New Orders Index stops falling.
Prices rose in November for the sixth consecutive month, but the rate of increase dropped sharply from October and September. The price index registered 86.7 percent, down from 76.4 percent in October.
The price increases mostly reflected the rise of crude oil prices, petrochemical feed stocks and derivatives, the report said.
"In the light of the sharp drop in the economy and demand, purchasers are fiercely resisting price increases. It is likely we have seen the peak in Middle East crisis-related inflation and that rice increases will largely subside in the future."
Employment declined for the 21st consecutive month, with the index falling to 36.7 percent, a sharp four-point drop from October (40.7 percent), and the lowest level since December 1982.
However, November's increase in New Export Orders was the 35th consecutive monthly rise, to 55.0 percent, sharply up from 51.0 percent in October, which was the lowest rate of growth since this indicator was initiated in Jan. 1988.
Imports declined for the seventh consecutive month to 42.0 percent, sharply down from 46.5 percent in October and the lowest level since the group started recording the index in October 1989.
Production fell for the fourth consecutive month, slipping to 41.8 percent from 43.0 percent in October. The 41.8 percent is the lowest since September 1982.
"Considering that the New Order Index is the weakest in eight years, it is unrealistic to expect a reverse soon in the six-month continually worsening trend in production," the report said.
Supplier deliveries were faster in November for the third consecutive month. They rose to 49.6 percent, although at a lesser rate than the two previous months.
Inventories declined in November for the 24th consecutive month, at almost the same rate as in October. "Purchasers seem bent on lowering their inventory-to-sales ratio even further as manufacturers ride out their decline in sales," the report said.
Numerous Association members reported actions taken to reduce employment including layoffs, plant closings, reductions through attrition and hiring freezes, and voluntary early retirement programs.
"Give the anemic state of the economy, it appears the decline in employment will continue," the report said.
The association's Report on Business is based on data compiled from monthly replies to questions asked of purchasing executives at more than 300 industrial companies. Twenty industries in 50 states are represented on the committee.